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PRMIA/ISDA Operational Risk in E Trading

PRMIA/ISDA Operational Risk in E Trading. London Wednesday 10th April 2002 G D Woods Managing Director +44 207 678 3633 David.Woods@abnamro.com. E Risks. Aren’t really new Market & Credit Risk work differently in an e-environment Operational Risk more discussed. Seven Types of Risk.

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PRMIA/ISDA Operational Risk in E Trading

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  1. PRMIA/ISDAOperational Risk in E Trading London Wednesday 10th April 2002 G D Woods Managing Director +44 207 678 3633 David.Woods@abnamro.com

  2. E Risks • Aren’t really new • Market & Credit Risk work differently in an e-environment • Operational Risk more discussed Property of ABN AMRO Bank N.V.

  3. Seven Types of Risk • Inside the Organisation- People- Processes- Technology- Strategy • Outside the Organisation- Business Environment- Legal Systems- Bad Guys (Attribution - Dr Nigel Upton, LBS) Property of ABN AMRO Bank N.V.

  4. Risks that Change • FX Risk • IR Risk • Liquidity Risk • Reputation Risk • Customer Acquisition Risk • Speed Property of ABN AMRO Bank N.V.

  5. A Checklist of e-Business Risk Issues Risk Source Check Risk Issues (Attribution - Dr Nigel Upton, LBS) Property of ABN AMRO Bank N.V.

  6. What we’re trying to achieve • Lower error rates • Lower costs • Acceptable Risk/return Property of ABN AMRO Bank N.V.

  7. And the Potholes... • Mistakes are more costly • Higher 3rd party risks • Risk clustering • Resource availability • Product scalability Property of ABN AMRO Bank N.V.

  8. Management • Must understand Risks & effect on Business process • Decide on Risks • Accept Risks • Instil culture of Risk awareness Property of ABN AMRO Bank N.V.

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